Bulletin: Bank Mandiri's 2018 Profit Growth Provides Buffer Against Asset Quality Risks

SINGAPORE (S&P Global Ratings) Jan. 29, 2019--S&P Global Ratings said today that PT Bank Mandiri (Persero)'s improved financial performance will enable it to withstand emerging risks in 2019. We believe that Mandiri (BB+/Stable/B) is well prepared to weather asset quality challenges from higher interest rates or volatile commodity prices. This is reflected in the bank's high Tier-1 capital ratio of 19.8% and coverage against nonperforming loans (NPLs) of 143% as of end-2018. Mandiri's dividend payout ratio in 2018 and 2019 will likely remain high, in line with that in 2016 and 2017 (45%), given the ample headroom in its capital ratios. We see upside potential for Mandiri's net interest margins in 2019 as higher policy rates gradually transmit to loan

...SINGAPORE (S&P Global Ratings) Jan. 29, 2019--S&P Global Ratings said today that PT Bank Mandiri (Persero)'s improved financial performance will enable it to withstand emerging risks in 2019. We believe that Mandiri (##+/Stable/B) is well prepared to weather asset quality challenges from higher interest rates or volatile commodity prices. This is reflected in the bank's high Tier-1 capital ratio of 19.8% and coverage against nonperforming loans (NPLs) of 143% as of end-2018. Mandiri's dividend payout ratio in 2018 and 2019 will likely remain high, in line with that in 2016 and 2017 (45%), given the ample headroom in its capital ratios. We see upside potential for Mandiri's net interest margins in 2019 as higher policy rates gradually transmit to loan yields. The bank's reported pre-tax return on assets improved to 3.0% in 2018, from 2.6% in 2017. The 21% growth in profit was primarily driven by lower credit costs and higher fee income. The bank's stressed loans (NPLs plus restructured loans...

Bulletin